Senator Carper Launches Web Page Tracking USPS Losses

Senator Carper (Delaware) has launched a new page at his official site that includes tracking and comment regarding losses by USPS. His page states…

As we learned this week, the Postal Service is moving forward with cutting hours at post offices and offering retirement incentives for some postal workers across the country. Rather than forcing the Postal Service to continue to rely on these sorts of piecemeal, stopgap measures to cut costs, Congress must work to enact comprehensive reform that provides the tools and resources the Postal Service needs to survive in the 21st Century. The Senate has done this. The ball is in the House’s court. Although the Postal Reform Act of 2011 was passed out of the relevant House committee in October 2011, leaders in the House of Representatives have yet to schedule a vote on the bill. The Senate, however, passed a bipartisan postal reform bill, the 21st Century Postal Service Act, on April 25, 2012.

With each day that the House fails to take action, the Postal Service loses $25 million. Further delays could accelerate an already deteriorating financial situation at the Postal Service that would threaten a mailing industry that employs over 8 million people and generates nearly $1 trillion in economic activity each year. Make no mistake, the Postal Service’s financial problems are dire, but they are solvable if Congress acts to pass comprehensive postal reform legislation.

The Postal Service’s Losses, By the Numbers

$6,500,000,000 Total FY 2012 Postal Service Losses So Far$500,000,000 What New USPS Cost-Cutting Plan for Post Offices Saves in 1 Year$25,000,000 What the Postal Service Loses Each Day16 Days How Long it Currently Takes USPS to lose $500,000,000 – the same amount of savings announced in new USPS plan$13,000,000,000+ Current Postal Service Debt to U.S. Treasury143 Days Until USPS has to pay $11.1 billion for future retiree healthcare costs (as of 5/10)15 Days Since the Senate Passed Comprehensive Postal Reform Legislation (as of 5/10)211 Days Since the House Reported Its Postal Reform Bill Out of Committee (as of 5/10)??? Days Until the House Takes Action on Postal Reform Legislation

But it works just as well here as the losses stated in this ‘article’ are nothing more than outright lies…

Red Herrings, Pink Elephants and Gorillas! Oh MY!!

Dr. James Gattuso would have you and I believe that the case for postal closures is based solely upon numbers. There are two problems with this. First, according to a study commissioned by the postal service itself, these closures will worsen the financial condition of the USPS. Second, these closures fail to address the actual cause of the financial ‘crisis’ currently faced by the postal service in any way.

Dr. Gattuso states that 1st class mail revenues have fallen 25% in the last 6 years. What he doesn’t mention is that this decline mirrors the last several recessions and that mail volume has always recovered. Even with the drop in 1st class volume, the USPS had record gross profits of $75 billion in 2007/08 and averaged almost $71 billion/yr during those same 6 years. PMG Donahoe himself admits that the USPS has cut 34% of its workforce, almost 300,000 jobs lost, since 2000. Most of the rank-and-file postal workforce hasn’t had a COLA increase in nearly four years and their next raise will be the first in over three. Why then is the USPS unable to show a profit?

That, my friends, would be what is known as the 800lb gorilla in the room that no one wants to acknowledge. Its name is PAEA, or The Postal Accountability and Enhancement Act passed by Congress, coincidentally enough, in 2006. Since HR 6407 was enacted, it has been impossible for the postal service to show a profit even when their operations are fiscally sound to the tune of $100’s of millions/quarter. Congress knew full well that PAEA would lead the postal service to the very precipice it currently dangles from. However, the temptation of billions of non-taxpayer dollars being funneled from USPS coffers directly into the US Treasury, for the government to spend as it pleased, was too much to resist.

How did this happen? Well, PAEA directs that CSRS (civil service retirement system) and FERS (federal employee retirement system) be funded at 100%. The gold standard for Fortune 500 companies is 80%. The ‘dynamic’ actuarial formulas being used are critically flawed, independent of funding percentage, and the result is massive overages in these retirement systems to the tune of 10’s, if not 100’s of billions in postal earnings. Most of you probably haven’t heard of this as it’s an ugly little secret Congress, the PMG and USPS Corporate don’t want you to know about as it basically amounts to a hidden tax every time you pay for postage and postal products.

It also mandates that the postal service prefund the PSRHB (postal service retiree health benefits) fund. Sounds like a good idea, right? This prefunding is to be accomplished over a decade’s time for a period of 75 years! The USPS has been required to pay almost $6 billion/year since ‘06 to fund the health benefits of possible future retirees who haven’t even been born yet for a postal service which may no longer exist by 2081, the period of time this prefunding covers. No other government/civilian entity in the world operates under this constraint. This prefunding alone accounts for well over 80% of USPS red ink.

*Even postal Service Inspector General David C. Williams said the programs are flush with funds. He said the Postal Service has “significantly exceeded” the amount that the federal government and the nation’s most profitable corporations have socked away for pension and retiree health care. “Using ratepayer funds, it has built a war chest of over $326 billion to address its future liabilities.” That’s almost a third of a trillion as of 6 February 2012. Can this congressionally mandated nightmare be corrected?

Yes, quite simply in fact. First, use industry standard ‘static’ actuarial formulas to calculate CSRS/FERS funding amounts. Second, adjust the funding percentages for both to 80%. Third, eliminate PSRHB prefunding altogether. Via interest accrual alone, it will be fully financed within the next two decades through 2081. Do these three things and you’ve solved the postal service’s financial crisis overnight without closing a single plant or branch office, eliminating a single job; unnecessarily raising rates again or destroying 1st class mail standards and, by so doing, subverting our constitutionally mandated charter of service to the people of the United States of America.

Dr. Gattuso also drags out the tired old dog of taxpayer funded bailouts, “Without change, the government-run enterprise will soon fail, with taxpayers stuck with the bill for cleaning up the mess.” This is a red herring as the postal service has been entirely self sufficient, a.k.a. – NO taxpayer funding, since the early 80’s. Due to the burden of PAEA, the postal service has recently had to ‘borrow’ back money from the treasury which should never have been taken from the USPS to begin with. The government has been ‘borrowing’ from the postal service since 2006. The USPS was never intended to be a profit mill for the federal government. The windfall they’ve enjoyed belongs to the postal service, not the other way around.

As a “government-run enterprise” comprised of over half-a-million employees of the Executive Branch of the government, the postal service should enjoy cabinet level representation answerable directly to the President. Instead, it is being run into the ground by a PMG lording it over seemingly innumerable VP’s; many of whom make more than the President of the United States in pay, incentives and ‘pay for performance’. The PRC and the Board of Governors must be streamlined and directed to work in the best interests of the Postal Service, not for the special interests who would destroy it. The GAO (Government Accountability Office) and the Oversight Committee should have no authority over the postal service as it is NOT taxpayer funded; unlike the rest of the federal government, including themselves.

Dr. Gattuso mentions the “lengthy and cumbersome” closure process. The AMP (area mail processing) studies are a sham and the process is entirely perfunctory. It is in place to make communities and employees feel as if they have a voice, when the reality is that over 90% of these closure decisions were made in advance. How else could you explain choosing one of the best plants in the nation for consolidation into one that isn’t? That would be the P&DF in Gulfport, MS. The USPS owns this facility, new construction completed in Oct ’96, and the land it sits on outright. The facility it may be consolidated into is 60 miles away and leased by the postal service at a cost of over $1 million/month. Politicians shouldn’t have to be making back room deals to try and keep ‘their’ post offices/plants open. They should be asking, ‘why is the postal service closing them to begin with?’

That brings us to the pink elephant in the room. Its name is profitability. Dr. Gattuso references many stats and figures in his argument for closures. While some are valid, many are questionable, if not fabricated entirely out of whole cloth. When asked about the foot traffic figures, the USPS was unable to provide ANY proof that these numbers were legitimate, as opposed to being a complete fiction. Similar to the $238 billion former PMG Potter said we ‘could’ lose in the next 10 years back in March ’10. As for the profitability of various branch offices; the USPS is not mandated to break even, much less make a profit. The fact that it continues to do so under woefully inadequate management, while remaining financially hobbled by Congress, is a testament to the men, women, minorities and veterans (myself one) who work here and have been left wondering, for the last 8 months, what tomorrow may bring.

We process and deliver over 40% of the world’s mail. We equal the entire annual volume of UPS and FedEx combined twice a week. We do it more efficiently and more cheaply than all but the very smallest world posts. Please don’t let the fear tactics of Postmaster General Donahoe or the smear tactics of some in Congress deprive you of the best postal service in the world. A service we are required to provide at a reasonable cost, in the timeliest manner possible, to every address in America regardless of our bottom line.

Network Rationalization (plant closures) and RAOI (post office branch closures) are not the answer. They are unnecessary and fail to address the three very real problems created by Congress when they enacted PAEA in 2006. The USPS 5-Year ‘Plan to Profitability:http://about.usps.com/?news/national-releases/?2012/?pr12_0217profitability.pdf
is also not the answer. It illustrates how much better we are than any other post in the world and then maps out how we can be ‘fixed’ by becoming more like them. It also states, “Much of the customer base is unaware of the current standards, notably overnight.” This is a pretext to lower service standards by implying that our real stakeholders won’t care of their medicines, checks, birthday/Christmas/?graduation/wedding/etc. cards/invitations are just a ‘little’ late.

Please write your Representative and ask them to demand that Congressman Issa and the Oversight Committee allow HR 1351, which has had 229 cosponsors since October of last year, to go before the full House for a vote. HR 2309 only has Issa/Ross as sponsors and had to be bullied through the Oversight Committee. Ask your Senators to cosponsor S 1649, HR 1351’s sister bill in the Senate. This legislation fixes what Congress broke in 2006. Ask them to do it before the election. Ask them to please not let the PMG do any more damage to your United States Postal Service. Please write them, before it is too late.